{"id":4174,"date":"2010-10-08T09:05:50","date_gmt":"2010-10-08T13:05:50","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=4174"},"modified":"2010-10-08T09:22:59","modified_gmt":"2010-10-08T13:22:59","slug":"the-dream-dont-fight-the-feds","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=4174","title":{"rendered":"The Dream. Don’t fight the feds."},"content":{"rendered":"

Susan went out with the girls. I went to our local Shake Shack<\/em>, Manhattan’s hottest hamburger chain and then to Starbucks. There was a young man with a movie script.<\/p>\n

“You auditioning?” I asked.<\/p>\n

“No, I wrote it.”<\/p>\n

“Who’s producing it?”<\/p>\n

“No one. I just finished it. I’m showing it. Hopefully, someone will buy.”<\/p>\n

“How long did it take you to write it?” I asked.<\/p>\n

“The last year.”<\/p>\n

“What’s your day job?”<\/p>\n

“The script has been my day and night\u00a0 job for the last year.”<\/p>\n

“What have you been living on?”<\/p>\n

“Not very much.”<\/p>\n

“How much longer do you have?”<\/p>\n

“My savings run out in three weeks.”<\/p>\n

I tried to explain that these were the best days of his life. A dream. Adrenalin pumping. No money. The thrill. The excitement.<\/p>\n

When you get old and successful, you’ll worry about which stock or bond is going up or down — which is B-O-R-I-N-G, compared to a script about love and anarchy in Paris at the turn of last century.<\/p>\n

I’m tearing as I write this. I can remember the days of dreams and poverty. They were wonderful.<\/p>\n

Don’t fight the feds. <\/strong><\/span>The feds want interest rates to fall, and stocks to rise. The whole system is\u00a0 insane. The Federal Reserve has a dual goal — keep employment up and inflation down.\u00a0 But, to accomplish those goals, it can do only one thing –muck with interest rates.<\/p>\n

It figures if it lowers and lowers and lowers interest rates ultimately someone (corporations?) will borrow money, build factories and employ people, hence solving the unemployment problem.<\/p>\n

But corporations don’t borrow money because it’s cheap. They borrow money when they see great opportunities and when their factories are running at more than full capacity. Right now, they’re not. Factories have plenty of capacity. And there aren’t a whole lot of brilliant opportunities around — like infrastructure building and new energy.<\/p>\n

Creating those opportunities — or at least setting the framework for creating those opportunities — is the role of the Federal government. (Like they do in China.) But our Administration is\u00a0 toothless and visionless and among the worst salesmen in the history of the world.<\/p>\n

My latest favorite idiocy — the Feds give money to the states to build high-speed rail lines (like they have in China). The state governors reject the federal rail largess because they will need to pony up some monies as well and they don’t have the money. Dah! Surely, someone in Washington could have figured this out…?<\/p>\n

I’d love to invest in wind turbines, in solar power, in electric car companies. in new battery makers, in all the new exciting technologies that will boost our economy into the 22nd century. (Stop that Harry, you’re beginning to sound like a politician.)<\/p>\n

But the fact is that all these technologies are semi-bust<\/strong> without guidance from the feds.<\/p>\n

Oil is up, you say. Yes, it’s up and alternative energies make a little more sense. But only a little more sense. For them to make real sense, oil would need to go up much more. And it won’t. Why not? Because the oil producers (especially Saudi) will simply crank up their production and prices will tumble. You can’t build an alternate energy business when the cheapest energy — dragging oil out of the ground at $2 a barrel — is around, in unlimited quantities.<\/p>\n

So what’s our government doing? Reducing interest rates (and screwing every retiree and person living on a fixed income).<\/p>\n

BubbleVision flashed across my screen this morning the ten-year Fed treasury rate. It’s now 2.41%. A few months ago (when I last looked) it was 2.81%. Down and down we go.<\/p>\n

Which brings me to my favorite worst investment — TBT. The best that long-term fed rates will rise.<\/p>\n

\"\"<\/a><\/p>\n

And as interest rates drop, putting your money into U.S. treasurys pays less and less. So fewer countries want to finance our yawning deficit. And the U.S. dollar falls. How bad is it? Australia’s dollar is nearly on par with the U.S. dollar. Its 98.4 cents. That’s staggering. They’re dancing in the streets in Sydney. I have money in Australia. I’m dancing. Suddenly American chewing gum is affordable to the suffering Aussies.<\/p>\n

How idiotic is it? Figure this. New York City has a gone through a fifty year building boom. New big buildings everywhere. And they’re still building. See yesterday’s column of the photo of the new crane on 57th Street.<\/p>\n

We haven’t had a new bridge or tunnel in Manhattan (which is a real island) since long before I moved here 40 years ago. We desperately need bridges and tunnels. The cost of the time lost sitting in traffic must be stupendous and is undoubtedly hurting the city’s finances. So what do I read this morning?<\/p>\n

The largest public transit project in the nation, a commuter train tunnel under the Hudson River to Manhattan, was halted on Thursday by Governor\u00a0 Chris Christie of New Jersey because, he said, the state could not afford its share of the project\u2019s rising cost.<\/p>\n

Gov. Chris Christie said that his state could not afford the rising cost of the multibillion-dollar project. Work had already started.Mr. Christie\u2019s decision stunned other government officials and advocates of public transportation because work on the tunnel was under way and $3 billion of federal financing had already been arranged \u2014 more money than had been committed to any other transit project in America.<\/p>\n

That idiotic story is being repeated all across the country as governors say no to “generous” fed handouts.<\/p>\n

I’m guessing these infrastructure projects, if they ever got off the ground (or got under the ground) would then benefit stocks like Caterpillar.<\/p>\n

We apparently also need the jobs, maybe? The Wall Street Journal just emailed me an alert, “the U.S. economy lost 95,000 jobs<\/strong> in September.” That’s people who could be building the tunnels, bridges, high-speed rail lines we as a nation so desperately need. But….\u00a0 next year oil will fall and we’ll be in our cars stuck in the endless line to get on the George Washington Bridge later this afternoon. Don’t get me started.<\/p>\n

Is there anyone in Washington (or elsewhere?) that understands this. It’s not rocket science.<\/p>\n

VectorVest’s top five stocks. <\/strong>They’re<\/span><\/span> <\/span>MSB, RES, FOSL,CLF and CEO. Do your own research. These guys are good, but not foolrpoof.
\n<\/span><\/p>\n

Apple gets an upgrade.<\/strong><\/span> Bank of america \/ Merrill Lynch thinks it’s worth $400. Their words:<\/p>\n

We raise our revenue\/EPS estimates on higher iPhones\/iPads, slightly offset by lower gross margins (20bps; iPad mix), and our PO goes to $400. We model F4Q10 revenue\/EPS of $19.2b\/$4.11, versus consensus of $18.7b\/$4.02 (recent revisions closer to $19.0b\/$4.15). We believe multiple tailwinds exist for iPhones, (AT&T, international) and iPads, and Asia production levels remain very solid. Lastly, we believe the street EPS estimates underestimate Apple’s gross margin potential over the medium-to-long-term.<\/p>\n

We model F4Q10 gross margin of 37.9%, down 120bps Q\/Q on iPhone bumper program (100bps) and some cost pressure from iPhone 4 (slightly higher cost than 3GS). That said, we believe our gross margin estimate could prove conservative on better than expected component pricing environment and iPad gross margin ramp, particularly in F1Q11 and beyond. Our F2011 and F2012 EPS estimates remain meaningfully above consensus, primarily on gross margin and also revenue. We are ~$2.00 higher than the street for F2011 and F2012.<\/p>\n

We are raising our F4Q10 iPhone units to 11.0m from 10.2m, given production data and strong international demand. We increase our F4Q10 iPad units to 4.75m from 3.5m, which still could be conservative given production levels (~15m for C2H10). We raise our F2011\/F2012 iPad unit estimates to 20.3\/25.5m from 15.5\/18.5m, due to U.S.\/international demand and Asia supply chain checks.<\/p>\n

Our F2011 and F2012 EPS of $19.78 and $22.91 (from $19.26 and $22.67) compare to First Call of $17.84 and $20.79. We raise our F2011 and F2012 revenue to $82.3b and $94.4b (from $79.7b and $90.3b) on higher iPhone and iPad units. Our PO increases to $400 from $360 based on 17x our C2011E NOPAT\/share estimate of $21 plus $45 in net cash.<\/p>\n

I’m still psyched about my Apple holdings. Lately I’ve been spending eons readying my print dictionary — see right hand column — for an electronic app on the iPhone, iPad, Touch, etc.\u00a0 The numbers show I can actually make more <\/strong>money selling an electronic version than a paper one. I haven’t been as excited about new technology in years. This is better than the joy of my first laptop — a Radio Shack TRS-100. Fortunately, Apple will not go the way of Radio Shack. It has Steve. Can you remember a single name of anyone who ran Radio Shack in the past 40 years? I can’t. I don’t even buy their batteries any longer. (They’re way overpriced.)<\/p>\n

Don’t stick someone else’s USB drive into your computer.<\/strong><\/span> That flash drive, stick or whatever you want to call it, contains a virus. Many corporations take the threat of USB drives so seriously they disable all the USB ports on their employees’ laptops and desktops.<\/p>\n

Latest favorite New Yorker cartoons.<\/strong><\/span><\/p>\n

\"\"<\/a><\/strong><\/span><\/p>\n

\"\"<\/a>
\n<\/strong><\/span><\/p>\n

\"\"<\/a><\/p>\n

This final cartoon hits home. One day I’ll tell you the story of how the IRS told me I had an idiot for a tax lawyer. Sadly, they were right.<\/p>\n

\"\"<\/a>
\n<\/strong><\/div>\n

Harry Newton who wonders why he can’t beat Israel, who’s 35 and never gets tired. Is beating Israel my dream? I need a day job.<\/p>\n","protected":false},"excerpt":{"rendered":"

Susan went out with the girls. I went to our local Shake Shack, Manhattan’s hottest hamburger chain and then to Starbucks. There was a young man with a movie script. “You auditioning?” I asked. “No, I wrote it.” “Who’s producing it?” “No one. I just finished it. I’m showing it. Hopefully, someone will buy.” “How […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4174","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/4174","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4174"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/4174\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}